Because distribution is one of the last stages of developing a marketing plan, it often doesn’t get the attention it deserves. Without changing your product, price or methods of promotion, you significantly increase your sales and profits -- or damage your business -- by how you mange your distribution activities. A regular review of your selling methods and locations will help you reach your sales and profit potentials.

Analysis

One of the main distribution channel activities you should perform at least annually is a review of the choices you are using and the ones you aren’t. Some distribution channels increase your sales volume but have higher costs that reduce your margins. Some are more expensive, but increase your gross profits. Where you sell your product sends a message to consumers about your brand. If you haven’t already, review the effect of every distribution channel available to you based on each one’s effect on your sales volumes, profit margins, gross profits, brand and office support necessary. Do this for channels you’ve previously decided against using to determine if you’ve made the right choice based on all the available information.

Contract Negotiations

If you use a wholesaler, retailers, distributors, independent sales reps or sales firms, telemarketing firms, online affiliates or any other form of non-direct sales channel, review your contract terms each year. When you first negotiate a contract, neither party knows exactly how well the product will sell. Once you see how your product sells, you might have more leverage to improve the terms of your contract. If a sales partner is ordering more from you, it’s a good sign they want your business. You might be able to negotiate a lower commission or higher purchase price, or more support in the form of in-store promotions, better display or shorter credit terms for inventory that partners order.

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Promotion

Both you and your distribution partners have a responsibility to promote your product if you both want maximum sales. Educate your partners to ensure they know who your target customer is, what your unique selling benefit is and what your branding goals are. Ask if your distributors need in-store signage, occasional discounts, different packaging, rebates or other promotional support that will create destination or impulse buys. Visit the locations and websites of your partners to determine if they are promoting you the same way you would. If not, give them specific suggestions for how they can increase sales of your products.

Ranking

Rank the performance of your distribution channels in a variety of categories to determine if it’s time to drop some, boost your participation in others or tweak certain channels. Rank your distribution channels by the following: cost of sales, profit margin, gross profit, sales volume, returns, receivables turnover and administrative resources needed to maintain the channel. While gross profits might seem to be your main goal, addressing issues such as low volumes or margins or high cost of sales or returns might help turn lower-ranked channels into your best performers.

References

Photo Credits

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About the Author

Sam Ashe-Edmunds has been writing and lecturing for decades. He has worked in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards. He is an internationally traveled sport science writer and lecturer. He has been published in print publications such as Entrepreneur, Tennis, SI for Kids, Chicago Tribune, Sacramento Bee, and on websites such Smart-Healthy-Living.net, SmartyCents and Youthletic. Edmunds has a bachelor's degree in journalism.